New Democratic Coalition Agreement Signed
17 December 2008
Published in
Inform
issue #97
See the full issue here.
Unblocked Parliament Passes Anti-crisis Measures
Yesterday, representatives of the three blocs that comprise the recently announced Coalition of National Development, Stability and Order signed an official coalition agreement. This rubber stamps the formation of the democratic coalition, announced last week in the wake of Volodymyr Lytvyn’s appointment as Chairman (speaker) of Ukraine’s parliament. The speaker appointment unblocked parliament, enabling lawmakers to pass measures to address the global financial crisis that is ravaging the country’s economy.
See the full issue here.
Unblocked Parliament Passes Anti-crisis Measures
Yesterday, representatives of the three blocs that comprise the recently announced Coalition of National Development, Stability and Order signed an official coalition agreement. This rubber stamps the formation of the democratic coalition, announced last week in the wake of Volodymyr Lytvyn’s appointment as Chairman (speaker) of Ukraine’s parliament. The speaker appointment unblocked parliament, enabling lawmakers to pass measures to address the global financial crisis that is ravaging the country’s economy.
The new coalition agreement was signed by Ivan
Kyrylenko, the parliamentary leader of the Bloc of
Yulia Tymoshenko (BYuT), Borys Tarasyuk, deputy
leader of the pro-presidential Our Ukraine-People’s
Self-Defence (OUPSD) bloc and Ihor Sharov, faction
leader of the centrist Lytvyn bloc. The formation
of the new coalition has removed the need for BYuT
and the Party of Regions to forge an alternative
national unity coalition – something BYuT’s leader,
Prime Minister Yulia Tymoshenko, hinted at unless
the pro-presidential bloc returned to the fold.
The first hurdle in ending the deadlock was overcome when a majority of lawmakers in each bloc signed their intent to form the new coalition. A simple majority is all that is needed to activate such an agreement. In the case of OU-PSD, 37 of its 72 lawmakers committed their bloc. With BYuT and the Lytvyn bloc already backing the coalition, its birth was announced last Wednesday, only moments after Mr Lytvyn was elected speaker by 244 lawmakers in the 450-seat assembly.
The president has been lukewarm to hostile in his reception to the coalition. It is believed that he would have preferred a grand coalition or pre-term elections. However, speaking to the BBC, he conceded the need to end the deadlock. “I agree that the political crisis doesn't help solve the economic crisis. We need to find a way out of the political crisis,” said Mr Yushchenko.
Prime Minister Yulia Tymoshenko was more upbeat. “I am convinced that this marks the end of the political crisis and will provide a strong platform from which to address the effects of the severe global financial and economic downturn,” she said.
No Parliamentary Election Before Presidential Election
Under the terms of the coalition agreement the parties have agreed that there should be no parliamentary election before the presidential election, which is slated for 2010. Yulia Tymoshenko will also stay on as prime minister.
“I see no legal grounds for substantial changes in the government and, first and foremost, the prime minister," said Mr Lytvyn.
Yesterday, Mr Kyrylenko hinted at cabinet changes. “We agreed that we will not change the government, but there will be changes in government," he said. Details of a reshuffle are expected in the next few days.
Warm Response from International and Financial Communities
News of the coalition was welcomed by the international community. The European People’s Party – Europe’s largest centre-right political movement – congratulated the president and premier (see next article).
The banking world also praised the new coalition, but tempered its enthusiasm due to the gloomy outlook for Ukraine’s economy. The country is struggling to cope with a falling hryvnia, which is down nearly 60 percent this year against the dollar, and a slump in industrial output, down 29 percent in November.
Tim Ash, head of emerging markets research for Central and Eastern Europe, Middle East and Africa for the Royal Bank of Scotland said, “The fact that a new coalition has been formed is positive, but the new administration and Ukraine more generally still faces huge challenges.”
The restoration of a working parliament to pass legislation to satisfy International Monetary Fund (IMF) conditions was a top priority for BYuT’s leadership. Last Thursday parliament passed the required spending cuts and on Friday approved measures aimed at softening the impact of the crisis. These included increased funding for pensions, deposit insurance and conditions that prohibit banks from unilaterally amending the conditions of loans.
Parliament also passed the first reading of a law aimed at defending Ukraine’s domestic car industry. The legislation, which is compliant with World Trade Organisation and EU rules, provides domestic manufacturers with local advantages without penalising foreign imports.
Despite tough conditions, the IMF suggested that Ukraine is now on course to receive its second tranche of the $16.4 billion bail-out loan announced in October. So far, Ukraine has received its first tranche amounting to $4.5 billion. In return the government scrapped plans to increase public spending.
Ceyla Pazarbasioglu, the head of the IMF mission to Ukraine, expressed her backing for the National Bank of Ukraine’s policies to let the market determine exchange rates and to recapitalise major banks.
“We appreciate that we are in for a bumpy ride,” said Viktor Pynzenyk, Minister for Finance, “but we now have a parliament that functions and a government that will not shirk from making the tough decisions needed to make progress.”
The first hurdle in ending the deadlock was overcome when a majority of lawmakers in each bloc signed their intent to form the new coalition. A simple majority is all that is needed to activate such an agreement. In the case of OU-PSD, 37 of its 72 lawmakers committed their bloc. With BYuT and the Lytvyn bloc already backing the coalition, its birth was announced last Wednesday, only moments after Mr Lytvyn was elected speaker by 244 lawmakers in the 450-seat assembly.
The president has been lukewarm to hostile in his reception to the coalition. It is believed that he would have preferred a grand coalition or pre-term elections. However, speaking to the BBC, he conceded the need to end the deadlock. “I agree that the political crisis doesn't help solve the economic crisis. We need to find a way out of the political crisis,” said Mr Yushchenko.
Prime Minister Yulia Tymoshenko was more upbeat. “I am convinced that this marks the end of the political crisis and will provide a strong platform from which to address the effects of the severe global financial and economic downturn,” she said.
No Parliamentary Election Before Presidential Election
Under the terms of the coalition agreement the parties have agreed that there should be no parliamentary election before the presidential election, which is slated for 2010. Yulia Tymoshenko will also stay on as prime minister.
“I see no legal grounds for substantial changes in the government and, first and foremost, the prime minister," said Mr Lytvyn.
Yesterday, Mr Kyrylenko hinted at cabinet changes. “We agreed that we will not change the government, but there will be changes in government," he said. Details of a reshuffle are expected in the next few days.
Warm Response from International and Financial Communities
News of the coalition was welcomed by the international community. The European People’s Party – Europe’s largest centre-right political movement – congratulated the president and premier (see next article).
The banking world also praised the new coalition, but tempered its enthusiasm due to the gloomy outlook for Ukraine’s economy. The country is struggling to cope with a falling hryvnia, which is down nearly 60 percent this year against the dollar, and a slump in industrial output, down 29 percent in November.
Tim Ash, head of emerging markets research for Central and Eastern Europe, Middle East and Africa for the Royal Bank of Scotland said, “The fact that a new coalition has been formed is positive, but the new administration and Ukraine more generally still faces huge challenges.”
The restoration of a working parliament to pass legislation to satisfy International Monetary Fund (IMF) conditions was a top priority for BYuT’s leadership. Last Thursday parliament passed the required spending cuts and on Friday approved measures aimed at softening the impact of the crisis. These included increased funding for pensions, deposit insurance and conditions that prohibit banks from unilaterally amending the conditions of loans.
Parliament also passed the first reading of a law aimed at defending Ukraine’s domestic car industry. The legislation, which is compliant with World Trade Organisation and EU rules, provides domestic manufacturers with local advantages without penalising foreign imports.
Despite tough conditions, the IMF suggested that Ukraine is now on course to receive its second tranche of the $16.4 billion bail-out loan announced in October. So far, Ukraine has received its first tranche amounting to $4.5 billion. In return the government scrapped plans to increase public spending.
Ceyla Pazarbasioglu, the head of the IMF mission to Ukraine, expressed her backing for the National Bank of Ukraine’s policies to let the market determine exchange rates and to recapitalise major banks.
“We appreciate that we are in for a bumpy ride,” said Viktor Pynzenyk, Minister for Finance, “but we now have a parliament that functions and a government that will not shirk from making the tough decisions needed to make progress.”